Making the decision to file bankruptcy is one that should never be taken lightly or without regard to the negative impact it will have on your credit report for nearly 10 years or more. Sometimes the choice between credit counseling and bankruptcy can be quite perplexing to consumers. If you’re a part of the thousands of financially troubled consumers that struggle every month to make minimum payments, then it’s possible that bankruptcy may be the only alternative especially when counseling wont produced financial salvation.
The difference in credit counseling and bankruptcy is the assistance you receive in constructing a repayment plan on outstanding debt. The problem with this process is the consumer who doesn’t have the financial resources to meet that repayment plan will not benefit and in that case bankruptcy is the final option.
Check out these tips that will help you pin point if bankruptcy is the answer for you:
1. Ability to make monthly payments – If you are unable to meet monthly obligations with a minimum payment without sacrificing basic living expenses because of an inability to increase monthly income or due to financial overextensions then this is the classic warning sign that bankruptcy is the end result.
2. No Credit Resources – When you find that all your credit options have been eliminated and your credit card, loans and lines of credit are maxed out and the increased accumulation of interest fees, penalties and monthly account fees have are to high to pay off in total, then bankruptcy is the only course of action to relieve this financial strain.
3. Number of accounts in collection – Having a credit account sent to collection has an overwhelming impact on your credit report and it gets worse with every collection account. This effect is virtually immediate and reduces your credit score once those accounts are sent to collections. When you unable to pay down a number of accounts in collections bankruptcy is the best options.
4. Number of accounts covered under bankruptcy – There are a number of credit accounts or loans that do not meet the requirements of bankruptcy. In other words certain outstanding debts are exempt from bankruptcy and can not be resolved through the process. But if most of your outstanding credit accounts meet the qualifications and are covered by bankruptcy then this may be the best solutions to your credit problems.
In the end facing the process of filing bankruptcy and the social outcome from its wake along with the years of bearing the burden of a bankruptcy means considering this end result should be done with a profound understanding of the complications. When the problem can’t be solved by any other means bankruptcy serve the purpose of relieving financial but not with a cost. 

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